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Question SECTION A: Answer 3 Questions from this Section (each questions has 25 marks) 1. Hague Co (HC) manufactures and sells pool cues and snooker cues. The cues both use the same type of good quality wood (ash) which can be difficult to source in sufficient quantity. The supply of ash is restricted to 8,100 kg per period. Ash costs 60 per kg. The cues are made by skilled craftsmen (highly skilled labour) who are well known for their workmanship. The skilled craftsmen take years to train and are difficult to recruit HC's craftsmen are generally only able to work for 18,000 hours in a period. The craftsmen are paid 27 per hour. HC sells the cues to a large market. Demand for the cues is strong, and in any period. up to 15,000 pool cues and 12,000 snooker cues could be sold. The selling price for pool cues is 67 and the selling price for snooker cues is 100. Manufacturing details for the two products are as follows: Pool cues Snooker cues Craftsmen time per cue 0.75 hours 1.25 hours Ash per cue 405 g 405 g Other variable costs per cue 2-45 1.95 HC does not keep inventory. Required: (2 marks) a) Calculate the contribution earned from each cue. b) Determine the optimal production plan for a typical period assuming that HC is seeking to maximise the contribution earned. You should produce a graph and solve using linear programming and simultaneous equations. (15 marks) c) Explain why limiting factor analysis is not used by HC. Explain whether linear programming would still be useful if HC added another product into the mix. (3 marks) (2 marks) d) Explain the meaning of a shadow price (dual price) e) Calculate the shadow price for one hour of labour. (3 marks) (total 25 marks)